That was November 1999, and Sorenson had just quit his head roasting job at Lighthouse Roasters Fine Coffees, bought a 5-kilo coffee roaster for $8,300 (emptying out his savings account) and set up a small roastery and café called Stumptown Coffee Roasters in a run-down area in Southeast Portland, Ore. It was, Sorenson felt, his duty.

"Coffee is as complex and beautiful as the finest wines in the world, but the majority of coffee being served and brewed is rubbish," he says. "It was the right thing to do, for coffee, my community, my customers and my employees."

But as much as those customers appreciated Sorenson's passion, they just couldn't see coffee as something that would fire up people's tastes and passions as much as food or wine--even in Portland.

Nearly 12 years on, Sorenson's vintaged-out café on 45th and Division is alive and thriving. The surrounding neighborhood boasts an upscale Thai restaurant serving Vietnamese Stumptown drip coffee and is roaming grounds for an ice cream truck selling gourmet, handcrafted treats in special Stumptown coffee flavors. The company now owns the 10,000-square-foot building that houses the original café as a warehouse and administrative base--and it's still not big enough. There are offices and a main roastery in other parts of Portland, and the search is on for a second space to consolidate operations.

It's fair to say that Stumptown has become an integral part of the community, having played a big part in Portland's rise as a coffee and foodie destination over the last decade. More important for business, having raked in nearly $20 million last year across its strong wholesale operation, nine heavily trafficked coffee bars in Portland, Seattle and New York City, and a coveted network of 500 wholesale customers nationwide, Sorenson keeps doing really cool things with--and for--the coffee culture.

Coffee, says Matt Lounsbury, Stumptown's barista-turned-head of operations (and at the very beginning, Sorenson says, "just another suit" he made lattes for), is serious business at this company. For beans to be deemed worthy of sale, they have to score 86 or higher out of 100 in a strict taste test. If it's really good, it's not unusual for Sorenson to break records for prices paid--in one case, the enormous sum of $47.06 per pound against an average price of around $2.

The company's commitment to direct trade practices means paying two or three times more than fair trade prices to ensure real sustainability and structural improvements at partner farms. Quality, Lounsbury stresses, has only improved as Stumptown has expanded.

"Almost every other company is operating on higher margins," Lounsbury says. "Our scores, the focus on quality over everything else--no one's doing that."

At Stumptown's Portland headquarters, you can grab the current edition of Cherry, the company's coffee zine. The first line reads, grandly, "A really spectacular cup of coffee is a story, about the person who grew, picked and processed it, about the person who roasted it, about the person who prepared it." It's printed on handsome rustic-colored paper, bound with red thread and tucked into the front pocket of a thick folder containing exactly these types of stories for several dozen coffees and their respective farms.

Cool Beans

How coffee culture has had an impact

1. Gourmet: An exotic bean could be the key to coffee consumers' hearts. Some of the world's most expensive beans, which sell for hundreds of dollars per pound, are harvested from … well, poop. The civet, a catlike animal found in Southeast Asia, eats only the ripest coffee cherries, then excretes the fermented gourmet beans.

2. Beauty: In 2009, the global skincare market generated total revenues of $66 million, and the industry continues to grow. Coffee can be found in many skincare products and is one of the most common ingredients in anti-cellulite creams. Caffeine is the key: It constricts blood vessels and has anti-inflammatory and antioxidant properties. Is there anything coffee can't fix?

3. Robots: The Clover is an $11,000 automated, programmable brewing system developed in 2005 by Seattle-based Coffee Equipment Company. It blends vacuum, French press and computer technologies to create a single cup of gourmet coffee at a time. Coffee lovers can have the Clover experience at select cafés and Starbucks locations nationwide.

4. Clothes: We drink it, rub it on our skin and now we can wear it. Taiwanese fabric manufacturer Singtex uses recycled coffee grounds to make sportswear and supplies for retailers like Nike and The North Face. Singtex's process turns the grounds into yarn, which is then used in many of their fabrics; the grounds from just one cup of coffee can be used to make a couple of T-shirts.

5. Equipment: How much would you pay for the perfect brew? In 2008, Blue Bottle Coffee dropped $20,000 for a Japanese coffee brewer called a siphon bar--the first halogen-powered coffee machine in the U.S. --Katie Rossomano

A few blocks away is Stumptown's public tasting annex--the first place of its kind when it opened in 2005. There, an impeccably groomed and white-clad barista sets up a cupping with quick precision, seven coffees in a row, ordered by "mouthfeel." He expounds on number two in the lineup, the Helsar Reserva from Costa Rica, which is, to him, "the perfect cup of coffee, so smooth and balanced you can't distinguish one note over another."

The room has the hint of a chemistry lab, with big glass jars on wood shelving, brewing equipment and a wide, pristine countertop. A video of Finca el Injerto, one of Stumptown's best partner farms in Guatemala, loops on a flat-screen on the back wall. The merchandise is limited: beans for $12.50 per 12-oz. bag, artsy posters of coffee farmers.

Roll your eyes at the glorified baristas, exotic coffee and preoccupation with catchwords like co-op, organic and direct trade all you want, but the world is undergoing a coffee renaissance. And when it comes to processing and brewing methods, the quality has never been this high. Consumers are already enamored by the snobbishness of it all, if the 20 percent year-over-year growth of gourmet coffee sales is anything to go by.

Stumptown is at the center of the movement, says Barista magazine editor in chief Sarah Allen, who has known Sorenson since he was doing shifts as a barista. "None of this would have happened if Duane hadn't always done things his own way," Allen says. "Stumptown's still independent, and not tied down to fair trade and organic. It's just about paying as much money as necessary for the best coffee in the world and trying new things."

New things, perhaps, like Berserker Bock, a breakfast beer collaboration with Brooklyn brewery Sixpoint Craft Ales, or Bikes to Rwanda, a nonprofit that sends cargo bikes to coffee farmers. Or last summer's pop-up café in Amsterdam, for which Sorenson flew out a bunch of employees, rented a big house and proceeded to make the Dutch coffee, Stumptown style. Stumptown even delved into packaging this spring, releasing cold brew coffee in stubby glass bottles to lessen the company's use of plastic. Every project was a hit.

Sorenson's marketing and design instincts are spot on, too, says coffee critic Oliver Strand. He remembers how Sorenson spotted a glaring gap in New York's food culture--coffee--and managed to become a "kind of home team" shortly after opening in 2009.

"At the time, there wasn't a roaster around that was as encyclopedic and innovative," Strand says, noting that with the $450,000 buildout of the elegant, European-style coffee bar inside the trendy New York Ace Hotel, Stumptown succeeded in turning coffee into something "urban, grown-up and sophisticated." It also helped that instead of a flashy launch, the company opted for a grass-roots approach: wooden, artisanal signs, some drawn by baristas, posted at respected restaurants around the city and designed to capture attention with their distinctiveness.

And once Sorenson has your attention, he knows how to keep it. Even his employees (numbering around 180), often artists and musicians, tend to stay on for years, because Stumptown offers health insurance, 401(k)s and salaries good enough to buy houses and send kids to college--in effect, elevating the barista from a part-time gig to a real occupation.

As for the man behind it all? "I'm doing awesome," Sorenson says, beaming. It's a gray, cold spring morning at the Chateau Marmont in Hollywood, Calif., and Sorenson--tan from a weekend spent rocking out at the Coachella music festival in Indio, Calif.--is sporting his standard plaid-patterned shirt, jeans, Red Wing boots, hipster glasses and trademark surfer-casual attitude. Over a (sadly) Berserker Bock-less breakfast, Entrepreneur asked Sorenson how he plans to keep conquering the caffeinated masses. He reveals: a few more locations, some rock 'n' roll and many more cups of that spectacular coffee.

Stumptown just keeps on growing.
Yeah, we have two new coffee bars in Manhattan and Brooklyn under construction, and we're seriously looking for a neighborhood in Chicago that would accept Stumptown.

Why Chicago?
I keep being drawn back because of how inspired I get from other entrepreneurs, restaurateurs, chefs and brew masters there. And since I have no other hobbies except for making people coffee, I've been thinking about it.

So it feels like a good idea.
Definitely. We've never run any surveys on checking out a particular area. It's always been by gut, because I've paid attention to how things work, and I have a lot of confidence in my staff and myself and the company--and coffee drinkers in that they're going to taste our coffee and get excited by it. That's why I've taken so many risks and made decisions without having the financial backing to do them.

Hasn't it been difficult to balance making money with doing what you want?
I don't know about difficult. I've been lucky to have great financial advisors around me from the start. They're very supportive, but I've also pushed them pretty hard. At times they've told me to settle down and make some money and not to open up another coffee bar … and I've shown up the next day with a signed lease.

But luckily, in every case we've been able to find the funding or borrow the money to do the next thing. I haven't brought too much water on the boat yet. But it's been close.

Did instinct lead you to start Stumptown?
It was also frustration, because there were restrictions I had on purchasing coffee. I had fallen in love with many of these special coffees and coffee farms that I was visiting, so I felt like rather than fighting someone for it, spinning that energy into doing it myself.

How do you keep Stumptown innovative after so many years?
I've had to broaden my role and get financial help, because at the very beginning, I was just a barista and roaster. I threw all the money in a shoebox, and I would count it when I needed to count it and write out a bank deposit slip. But as simple as it may seem, I've just been running with this concept of making people great coffee, and trying to improve quality and how employees are treated since I opened up my first shop 12 years ago.

Any mistakes?
Oh, tons. But the biggest regret was when I didn't listen to my gut and partnered up with someone. That lasted less than a year.

What's your response to grumblings that you've sold out?
We've gotten a lot of success in that we've grown, but you know, if anyone accuses us of selling out, they don't understand what that means. Even with growth, our company's expensive, because we're doing things that even small independents or the largest coffee companies aren't doing.

Like paying for your employees' health care.
Yeah, I offered health care as soon as we could, within six months of opening--and before I started taking a paycheck. It's the right thing to do. People look at the success of Stumptown and think I'm loaded, but I put it all back into the business like I have since day one, making improvements to coffee bars, on staff and so forth. I think what Peet's Coffee has done is inspirational. I want my customers for 20 or 30 years, and I want my kids to be able to work in this company, and my employees' kids, because that means they can afford to be here. There's also a massage therapist for staff, because I know it's a hard job, and if employees feel good, they'll make better coffee. The only downside is I can never get an appointment.

So no financial goals?
No, just growing and getting better, improving the way our employees are treated, improving our coffee and improving our facilities where we roast and brew. I want Stumptown to be respected as a specialty item,but also to be the most inexpensive luxury out there. I want it to be accessible to the most hard-core vegan punk rocker and also at the same time to the most successful entrepreneur for whom money is no object.

And you're doing that.
So far, so good. I think part of it is that our employees are treated well, and they understand what's going on in the company. My managers and I spend a lot of time seeing how employees are doing and what their needs are, and at the same time, letting them know what we need from them.

Seems pretty simple.
And obvious, in the sense of treating employees and customers and purveyors well, and looking for the best possible coffee we can find. [It's] obvious that once you find that coffee [you should] pay that coffee farmer a great price, but also follow up on seeing what else they might need. Relationships are really important.

What about relationships with competitors?
I feel if we do great things with our employees and our business, hopefully it's going to inspire other businesses, and I think it has.

People can't talk about Stumptown without mentioning its renegade, rock 'n' roll culture. How'd that come about?
Most of my inspiration comes from rock 'n' roll. It just gets me excited, and when you're excited it's easier to get things down. I've always reached out and hired creative people because it's been natural and easy to explain to artists and musicians what we want to accomplish at Stumptown, to communicate that this is my craft, my passion. Definitely folks outside of creative [circles] understand what we're trying to do, but the people we've been able to bring on have been artistic types.

All the coffee bars have a different energy. Intentional?
Absolutely. I want people to feel comfortable walking into a Stumptown coffee bar, so I've put a lot of time and energy and thought into the design of each coffee bar and where it's at. The Ace was our first coffee bar in New York City, and it's definitely our most elegant and high-energy.

I wanted to build that experience for Stumptown's employees and customers, to show respect for the company and specialty coffee, rather than throwing something together and saving a little money to buy a new car or new suit.

Is that somehow a reason why people say you're "controversial?"
I've heard that I'm pissing people off. Maybe what Stumptown is doing with quality and relationships and design is causing people to have to answer questions from their staff and coffee famers. But yeah, I'm pretty pedal-to-the-metal when I get excited. Once I have the idea I don't do a whole lot of thinking about it. I take my enthusiasm and just run with it.

Stumptown recently received an undisclosed sum from private equity firm TSG Consumer Partners, which has invested in brands like Voss, Vitaminwater and Terra Chips. Getting investment is usually seen as a smart way to grow a business, but people on blogs and Twitter said you'd sold out--why?
The fear and feedback I've been getting is that the company is changing for the worse and losing sight of quality. And, well, lots of folks are wanting to be haters. I've gotten criticism since the second day I opened up Stumptown about how we wouldn't be able to improve quality, that it's just coffee, and what's the big deal? But we've always been able to improve with the growth that we've accomplished.

Nothing's changing with management?
No. I wouldn't have taken the money if it compromised quality. The agreement we have with the new partners is that they're 100 percent excited about having [me] continuing to run and operate the company, rather than skimming and skimping on quality. It's exciting. In a time that's been difficult to find financing and borrow money, we were approached by an investor that understands and shares our values.

What will change?
Our coffee bars cost anywhere between $400,000 and $600,000 to build; a new roasting facility is between $1 million and $3 million. Now we can look at building a larger roasting facility and expanding headquarters in Portland. We'll be able to invest more in research, into employees' 401(k)s, and move into markets like Chicago, Los Angeles, San Francisco and Europe. Yeah, Europe. I'll be doing things that I've only dreamed about doing with Stumptown.

A History of Coffee

A History of Coffee

1652 - The first coffeehouse opens in England, where a cup of coffee is sold for a penny. Today, the average price for an espresso-based beverage in the U.S. is $2.45.

1773 - Following the Boston Tea Party, the Continental Congress declares coffee the official national beverage. Americans are now the world's leading coffee fanatics, consuming 400 million cups daily.

1790 - The first wholesale coffee roasting company in America is established--which leads to the first newspaper advertisement for coffee that appears the same year in the New York Daily Advertiser.

1903 - German coffee merchant Ludwig Roselius discovers that a shipment of coffee beans that had been soaked in water lost most of its caffeine, but retained its flavor. That realization leads him to produce the first decaffeinated coffee, Sanka Coffee. Twenty years later he introduces it to the U.S., where it's still distributed today by Kraft Foods.

1938 - Nestlé introduces Nescafé, the first “drinkable” instant coffee, and helps establish coffee's first wave. More than 70 years later, Nestlé remains one of the leading national retailers of instant coffee.

1962 - The first International Coffee Agreement is negotiated by the United Nations. Today, coffee is the second most valuable commodity in the modern global economy, with annual sales of $70 billion.

1972 - Filterfresh invents the first single-cup coffee brewing machine. Last year a popular single-serve system called Senseo produced total sales of $536 million.

2010 - Starbucks is still going strong after establishing coffee's second wave in the early '90s and carrying it to the third, rebounding from the economic downturn with total net revenues up 9.5 percent to $10.7 billion.